Preview — The Ascent Of Money
by Niall Ferguson

The Ascent Of Money: A Financial History Of The World

Bread, cash, dosh, dough, loot. Call it what you like, it matters now more than ever. In The Ascent of Money, Niall Ferguson shows that financial history is the back-story to all history.

From the banking dynasty who funded the Italian Renaissance to the stock market bubble that caused the French Revolution, this is the story of booms and busts as it's never been told beforBread, cash, dosh, dough, loot. Call it what you like, it matters now more than ever. In The Ascent of Money, Niall Ferguson shows that financial history is the back-story to all history.

From the banking dynasty who funded the Italian Renaissance to the stock market bubble that caused the French Revolution, this is the story of booms and busts as it's never been told before.

With the world in the grip of the biggest financial crisis since the Great Depression, there's never been a better time to understand the ascent - and descent - of money....more

Ferguson contends that today’s financial world is the result of four millennia of economic evolution. It is very important to the aims of this book that this metaphor is accepted. Ferguson looks at this evolution of money into the complicated financial ecosystem of today. He explores how money mutated into new tools/organisms and acquired characteristics that allowed it to meet the needs of its users/demands of its environment better. The tools that helpImperialism: The Darwinian Justification

Ferguson contends that today’s financial world is the result of four millennia of economic evolution. It is very important to the aims of this book that this metaphor is accepted. Ferguson looks at this evolution of money into the complicated financial ecosystem of today. He explores how money mutated into new tools/organisms and acquired characteristics that allowed it to meet the needs of its users/demands of its environment better. The tools that helped men make even more money or harness their own energies more efficiently were selected for as ‘fittest’ and soon took over the monetary environment.

This happened in fits and starts:

First came the invention of money itself, which is not given much attention to, probably because it is too shrouded in the mists of time (and also because the West has no unique claim on it, at any of its stages - even the more advanced forms). Then it started mutating into its various forms, conquering and occupying various niches according to functionality.

And according to Ferguson, the civilizations who had access to these new and more efficient tools were hugely benefitted and in many cases were at a decisive advantage, down to our day.

The Evolutionary Stages

1. Banks

Money, once it allowed quantification of the value of transactions soon led naturally to delayed payments and then to the institutions of lending and borrowing. These slowly grew to become banks, clearing houses for ever larger aggregations of borrowing and lending.

2. Bonds

The rulers and the lords were the biggest customers of the banks. In time governments that figured out how to utilize the credit market best thrived and their innovations led to government bonds and securitization of streams of interest payments. This matured into full-fledged bond markets by the 13th century. The rulers had great incentive to protect and regulate this amazing new source of funding! This led those governments most dependent on these markets to institute regulated public markets so as to maintain stability and security of transaction, which was in their own best interests. Transaction and discovery costs reduced drastically and areas with such markets proved extremely useful to their rulers, who could no raise money for wars much more effectively. Battles were now to be won and lost in the bond markets.

3. Stock Markets

By the seventeenth century, corporations started aping the states, a process that was not limited to only financial matters, and started to raise equity through share markets. This could only develop first in areas with already well developed bond markets and public markets and thus gave them a further advantage — the advantage derived from the financial tools now extended from wars to trade and industry. The West was rising buoyed by its financial innovations, in Ferguson’s view.

4. Insurance

With the institutions of bonds and shares prospering, the next step was to use the market to spread risk out. insurance funds and then pension funds exploited economies of scale and the laws of averages to provide financial protection against calculable risk. The corporations now had another decisive advantage in being able to have access to protection against risk and in a world where financial risk was the biggest danger any advantage there could prove world-conquering. The accumulation of financial innovations had already tipped the balance for the West and was now on its way to helping them conquer the world.

5. Real Estate

With the rise of more innovative instruments such as futures, options and other derivatives, it was now possible to increase leverage, not only for governments and corporations, but also for individual households. With government encouragement they soon increased their leverage and used that to invest more and more in real estate. This helped the western countries to have a larger and larger propertied class helping them to transition the into property-owning democracies, which, according to Ferguson, are the most robust sort.

6. Imperialism and Globalization: The Justified Culmination

Now we come to the crux of the narrative — Economies that combined all these institutional innovations - banks, bond markets, stock markets, insurance and property-owning democracy - performed better over the long run than those that did not, because financial intermediation generally permits a more efficient allocation of resources than, say, feudalism or central planning. The financial ecosystem evolved in the West was the best suited for governance and for human civilization in general. And it is for this reason that the Western financial model tended to spread around the world, first in the guise of imperialism, then in the guise of globalization, and has been vital for all sorts of progress achieved around the world — from the advance of science, the spread of law, mankind’s escape from the drudgery of subsistence agriculture and the misery of the Malthusian trap.

Ferguson has narrated the history of money as a financial evolution and thus given it the air of inevitable complexity and of progress. This makes it seem like the adoption of the ‘evolved’ financial system first by the West and them by the Rest is but a logical and inevitable choice that is for the best of the world at large.

It is noteworthy that Ferguson makes a point of using elaborate evolutionary metaphors to project the history of financial institutions in a Darwinian light.

Why?

According to this interpretation, financial history is essentially the result of institutional mutation and natural selection: Random ‘drift’ (innovations/ mutations that are not promoted by natural selection, but just happen) and ‘flow’ (innovations/mutations that are caused when, say, American practices are adopted by Chinese banks) play a part. There can also be ‘co-evolution’, when different financial species work and adapt together (like hedge funds and their prime brokers).

But market selection is the main driver. Financial organisms are in competition with one another for finite resources. At certain times and in certain places, certain species may become dominant. But innovations by competitor species, or the emergence of altogether new species, prevent any permanent hierarchy or monoculture from emerging. Broadly speaking, the law of the survival of the fittest applies. Institutions with a ‘selfish gene’ that is good at self-replication and self-perpetuation will tend to proliferate and endure.

As we can see there are certain key themes here:

a. That the survived institutions have to accepted as ‘fittest’ under Ferguson’s interpretation, and

b. That ‘selfishness’ of institutions/genes are rewarding for the species/humanity in the long run. So we should encourage the selfish imperialism of countries/the globalization of corporations today.

These are specious themes that are present in this book with a specific agenda, trying to escape notice by being presented in pseudoscientific light. And as we have seen from our discussion of how Ferguson uses the history of finance to show us how Imperialism was a good thing for the rest of the world, we can safely slot this book as another among Ferguson’s life-long attempts to come up with innovative apologetics for Empire....more

Another book from the vaguely centrist right, you know them, those economists and Greek translators and philosophers from the University of Chicago who assisted Pinochet in his fascist coup, won Nobel Prizes, misconstrued Plato to fit their world-view (I'm looking at you, Leo Strauss), and finally, today, when they are primarily involved in teaching a new generation to do the same things.

Well, Ferguson perhaps isn't so vehemently rabid about his political beliefs, and he doesn'tYay for empire!

Another book from the vaguely centrist right, you know them, those economists and Greek translators and philosophers from the University of Chicago who assisted Pinochet in his fascist coup, won Nobel Prizes, misconstrued Plato to fit their world-view (I'm looking at you, Leo Strauss), and finally, today, when they are primarily involved in teaching a new generation to do the same things.

Well, Ferguson perhaps isn't so vehemently rabid about his political beliefs, and he doesn't teach in Chicago. But he is their counterpart: the British free-trader. Only he has something the Chicago boys don't: that very old and very British urge to colonize those who have defaulted on their debts. We who are not so verse in financial lingo tend to call this imperialism, a much more effective imperialism because so incredibly beneficial to those who have the most to gain.

Ferguson does a very good job of making economic theory as understandable as possible (which means that I understood and could possibly recall about 30% of those unyielding financial terms and theories). It's an excellent day when intelligent historians do not stoop to "our" level to be understood: Ferguson makes his point without relying on that pitfall of historical writing: making history uncomplicated.

And yet, oh, and yet. The closest thing to socially adept you're going to get here is the gold standard, which by any standard (including its own) is a dangerous illusion of stability. And don't even think for a minute that Ferguson will even mention the naughty word "labor" as applied to a working force. He does his best to put a pretty, imperial British mask over his rough, working-class Scottish face, but for all his talk of bubbles and busts and liquidity and illiquidity and real estate and S & L, you have to wonder: is it possible that something so vacuous as a number on a screen can define us, politically, culturally, and spiritually? It's kind of a scary predicament, and _The Ascent of Money_ not only sets out to prove that this is true, it also aspires to show that "Planet Finance" is an evolutionary process, almost as evolutionary as evolution itself, with a little more ideology thrown in. The last chapter "Chimerica" is one reason to read the book (or at least that chapter) as it portrays a clear-sighted analysis of the US-China situation, which is becoming more intricate and dangerous each day.

It is a minor but slightly important book, more about finance than financial history. Then again, maybe finance is financial history.

StuartWow (lol) "Marx, Lenin and....Guevara" ! (Lol) As soon as you read a diatribe containing that particular lineup, you know that you're probably hearingWow (lol) "Marx, Lenin and....Guevara" ! (Lol) As soon as you read a diatribe containing that particular lineup, you know that you're probably hearing from someone who is most likely just as biased from his own ideological pole as those who he or she forcefully derides. ;-)...more
Jan 20, 2014 03:12PM

The book is titled The Ascent of Money, but it's not about the ascent of money. It's about the path of money, with the assumption that from the origin of the book's historical perspective, money has been the bedrock of civilization. There's no ascendancy, because there is nothing for it to compete with, in the author's telling. What the book really is is a straight history of the above-board financial markets, and to that extent it's a useful and largely enjoyable read, covering the move from baThe book is titled The Ascent of Money, but it's not about the ascent of money. It's about the path of money, with the assumption that from the origin of the book's historical perspective, money has been the bedrock of civilization. There's no ascendancy, because there is nothing for it to compete with, in the author's telling. What the book really is is a straight history of the above-board financial markets, and to that extent it's a useful and largely enjoyable read, covering the move from barter to coin, and from coin to virtual funds, and from virtual funds to algorithmic trading. The author does a wonderful job of jumping across vast time periods to draw comparisons (showing how even if technology changes, human nature does not). He does a terrible job of telling jokes, which comes across as a sort of nervous habit (mostly alliteration, puns, and pop-culture references), one that someone close to him should point out to him.

The absence of under-the-counter financial markets and their influence on, their substantial part of, the global economy seems like a significant blind spot. There are occasional asides to the Mafia, narco states, and the like, and of course when Ponzi schemes come to light they are acknowledged. But that's it. As such, it's sort of like this: if The Ascent of Money were a study of a city, it would only take stock (so to speak) of the goings on within buildings and institutions, and not of street life. In other words, it's not a full picture. It's like a Chamber of Commerce picture. (One other seeming blind spot: if I'm not mistaken, the author seems to have a disinclination toward companies that are not publicly traded.)

Also: I cannot recall reading a non-fiction book recently with less of a thesis. There is no overarching theme, no consciously enacted perspective, just the steady march of economic history proceeding like a fleshed-out timeline. I'd say most fiction I read has more of a thesis, more of a sense of perspective on the world, than this book does.

To be clear, there is a concluding section in which the correlations between biological evolution and monetary-system change is compared. But in effect what has happened is that after dropping occasional references to such a metaphor throughout the book, he then tries to tie it all together. In other words, the equation to produce this book was: write a history of (largely western) economics at a (largely) macro level, and then add a final chapter proposing a model, supported only by parenthetical references in the majority of the book. A comparison is not a thesis, especially when the comparison feels added on. Furthermore, the evolution metaphor is seriously sloppy. For a widely traveled professor at Harvard, he has created a loose-at-best metaphor with a floating subject that changes according to the need of his rhetoric, on a moment by moment, sentence by sentence basis: Has money ascended, like man is said to have? Has the nature of business? Has the market? If, as the author states, complex technological innovations haven't actually supplanted earlier modes like barter and loan sharks, then how can the comparison to mankind be made? Are we humans surrounded by our own competing ancestors? And if in fact this is about an ecological comparison, and not a one-on-one to mankind, then why not just say so? Because comparisons to man allow for the idea of the free market having a rational hive-mind sentience? Because The Ascent of Man sounds like a better logline than The Ecology of Money? It's altogether unclear. If after this much effort a book's thesis cannot be plainly stated, then it does not have one. What it has is a paper wrapper.

And as a side note, I may be mistaken, but the book seems to clarify when an economist is left-leaning but not when right-leaning. And the fact that George Soros and several other figures in finance are Jewish is pointed out, but no other religion is listed with any particular frequency when other major figures are mentioned.

One final thing: There is an anecdote about the film Mary Poppins early in the book that I highly recommend reading. I can't do it justice, but in brief: the author was invited to speak at a business event, and since the tone of his talk was somewhat negative about the economic short term and midterm, several of the attendees (all successful business-people) complained afterword, essentially taking issue with the presence of a non-businessperson, especially one deemed not enough of an optimistic booster. One of these complaints stated that they should have ditched him and just shown the movie Mary Poppins. The author then takes the opportunity to point out the extent to which Mary Poppins' plot rests on the instability of British banks. ...more

Ferguson is known as an economic historian yet his last few books were almost purely historical, with only brief passages on the economic aspects of historical events. Here, Ferguson returns to telling about, well, not so much economics as the evolution of finance. First money, then banks, then bonds, then equities, derivatives, insurance, and finally the causes of the recent credit crunch are explained and developed in simple and clear prose. Unlike 'War of the World' - a mammoth retelling of tFerguson is known as an economic historian yet his last few books were almost purely historical, with only brief passages on the economic aspects of historical events. Here, Ferguson returns to telling about, well, not so much economics as the evolution of finance. First money, then banks, then bonds, then equities, derivatives, insurance, and finally the causes of the recent credit crunch are explained and developed in simple and clear prose. Unlike 'War of the World' - a mammoth retelling of the horror of the 20th century (which I felt had an impersonal and rushed air, as though Ferguson had relied too heavily on his massive, globe-spanning team of researches from a host of universities), 'Ascent of Money' is Ferguson really dealing with what comes naturally to him, as an expert in both the early modern bond markets, quantitative finance, the inner workings of the House of Rothschild (as he should, he wrote the book(s) on them), the hubris behind Long Term Capital Management, and every other complicated aspect of the markets. Also, the endnotes are what really put Ferguson in a class above the rest of the clutter in the 'NEW IN NONFICTION' shelves, because Ferguson really is a world class academic. The footnotes reveal the real depth and breath of Ferguson's learning and research - everything from the Financial Times, personal correspondences, interviews from Democracy Now!, and every major current events book of the last generation, including the new George Soros book which I bought WITH this book - Let's get that straight: Ferguson had read and referenced a book which is so new it was on the same 'NEW IN NONFICTION' shelf near his. ...more

Life has a habit of proving me wrong. Recently I wrote a review of The Drunkard's Walk How Randomness Rules Our Lives and said something like you generally get a better understanding of a subject if you can see the historical path that has been followed in building the subject in the first place. This book is all historical path, but it has left me without a clearer understanding of what I had hoped to learn from it.

And this is a pity, as there are many things about money I would like a deeper uLife has a habit of proving me wrong. Recently I wrote a review of The Drunkard's Walk How Randomness Rules Our Lives and said something like you generally get a better understanding of a subject if you can see the historical path that has been followed in building the subject in the first place. This book is all historical path, but it has left me without a clearer understanding of what I had hoped to learn from it.

And this is a pity, as there are many things about money I would like a deeper understanding of. These are things that people ALWAYS take for granted in writing these sorts of books – and they are also things that I have NEVER understood. Exactly the same thing happens with astronomy. A lot of the universe seems to be made up of matter that has formed essentially into planes – our solar system is a good case in point with all of the planets going around the sun in what looks a lot like a disk. I know that Kant was one of the people who worked out why this should be the case, but other than knowing who worked it out, no one seems to ever explain why that ought to be the case. For years I had much the same problem with water freezing – in most liquids moving from a liquid to a solid decreases the volume, water does the exact opposite. It was only when someone explained the crystal structure of ice that this started to make sense. I do particularly like things to make sense.

My question about money has to do with the Stock Market. This is my understanding. Capitalism’s great invention was the joint stock company. This was a way of raising lots of money from lots of different sources so that a company could be formed that would do what needed to be done (build a railroad, put down a gas pipeline, whatever else). The motto of capitalism could just as easily be ‘spread the risk – spread the joy’. The point being that even if you had enough money on your own to build a railway it would probably not be a good idea for you to put all of your money into that one thing just in case things went terribly, terribly wrong. By getting lots of people to put smaller amounts of money into a broader range of activities the chance of all of them turning sour at the same time is greatly reduced. What you loose in total control, you more than make up for in avoiding sleepless nights.

So, let’s say I want to start a company to build a better mousetrap, following on from the remarkable success of both Agatha Christie’s and Hamlet’s earlier versions. I need $10,000 and so I issue 100 shares worth $100 each. People are crazy enough to buy these shares and now I have my money and start researching mice and killing them. All is good with the world. I come up with said mousetrap, one that kills mice by quoting all of the major soliloquies of Hamlet at them until they decide the answer to the question is ‘not to be’. I start making lots of money. The value of my company goes up to $20,000 – so each of the shares has doubled in price. I think I understand all of this so far. But now there is a market in my shares and people, not content with receiving dividends from the profits I’m making hand over fist, want to sell my shares and take their profit in one go. Okay, good. Lots of people decide to sell my shares at pretty much the same time – perhaps there has been a bit of a slide in confidence somewhere more generally and even though the ‘boring vermin to death’ mousetrap is selling well and people have even started talking about how nobly designed it is and in apprehension, how like a god and so on … the general downturn in the market means people are selling stock left, right and centre (which just also happens to include mine) and no one seems to be interested in buying stock. So, the price of my shares plummets.

The question I always have is – well, so what? Surely the only time the company ought to be worried about the price of its shares is when they are being issued – as, it seems to me, this is the only time when they are going to bring in any money to the company. What happens to the price following this would seem rather academic from the company’s perspective. I issued the stock to build a company, I have built that company, that company is going well – why should the stock price bother me at all?

Look, I know I’ve got this arse about face in some way – and that is fine – but my point is that I would have expected to come away from this book understanding how this sort of thing works – and I didn’t. Now, don’t get me wrong. I’ve read lots of books on pretty much this same theme and subject and I’ve never had this bit explained to me in a way I can understand. It is very possible that I’m just a dolt and have completely missed what is so utterly transparent to everyone else they don’t even see the point in explaining it (and as I’ve said already, it wouldn’t be the first time). All the same, it would be nice if someone, somewhere could point me to a book that explains this stuff in a way that even I can understand.

The bits of this book that were particularly good were mostly towards the end when he started discussing behavioural economics. I’m becoming a big fan of this subject, but I do seriously wonder what it will end up adding to economics theory per se. The fact we are ‘predictably irrational’ (Predictably Irrational The Hidden Forces That Shape Our Decisions)is interesting enough in itself, but what will be much more interesting will be when this subject stops being about curiosities (as discussed in books like Freakonomics Rev Ed A Rogue Economist Explores the Hidden Side of Everything) and when a more substantial and unified body of theory (preferably able to make predictions) grows up around these curious and fascinating facts.

The part of this book where he brushes aside Confessions of an Economic Hit Man by talking about how little of a percentage of US total trade comes from Panama (and therefore it simply wouldn’t make sense for the US to kill their president) is so silly as to beggar belief. Surely the percentage here is not of total of US trade, but the total of Panama's trade that is dedicated to the US. Surely too the canal should figure somewhere in these calculations – it did very much so in the hit man book. And surely before dropping this argument entirely someone might want to talk about things without a direct 'economic' value to the US, say the value of having yet another UN vote always in US favour by a compliant Panama.

This writer is very much of the Chicago School – never even mentions that even in its heyday (and even in the US) there were saltwater economists who rejected the ultra-liberalism of the freshwater economists. But economics is a political and ideological ‘science’ – which is another reason we should hope that adding some cutting edge psychology into the mix might help. His mostly uncritical review of the Chilean ‘economic miracle’ gives the ‘all is sunshine’ version of Naomi Klein’s much darker version in The Shock Doctrine The Rise of Disaster Capitalism.

There is a television program that goes with this – I ought to watch it, I guess, but am probably unlikely to....more

"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance".Cicero - 55 BC

So what have we learned in 2 Millennia? Evidently nothing?

Ferguson argued that financial markets are like the mirror of mankind, revealing the works of how we function in"The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt. People must again learn to work, instead of living on public assistance".Cicero - 55 BC

So what have we learned in 2 Millennia? Evidently nothing?

Ferguson argued that financial markets are like the mirror of mankind, revealing the works of how we function in the world. Why can we learn anything from history? He told us -- in his most brilliant segment of the book, the "afterwords" -- that there are three reasons:

1. financilal market is about future, and future lies in the realm of uncertainty, as opposed to calculable risk (risk is measurable, but uncertainty is not).

2. because we are human, our behavioral bias generates inherent instability in the system.

3. financial markets are analogous to a Darwinian system where institutional mutation and natural selection processes play important parts. "Things just happen" (the "drift" of random mutation) and "Things are made to happen" (the "flow" of the natural section) generate unpredictable dynamism in the system.

Overall, this is an excellent book with good contents and good writing style. ...more

Chris SwankAmazing Cicero quotation!! While reading the first couple lines, I though you were speaking a modern America. It blew my mind when I read "…Cicero - 5Amazing Cicero quotation!! While reading the first couple lines, I though you were speaking a modern America. It blew my mind when I read "…Cicero - 55 B.C." Excellent review....more
Nov 01, 2012 10:58PM

Contemplating the title of this book, my first thought was that it was by a person of the political left, maybe not the Pope, but an anti-capitalist and moralizer on the all-around evil of the financial system.

"No," said the person who recommended it to me; "He's center right."

So, then I saw the title as deriving from the bad-boy mentality of the author, thumbing his nose at such views. The author has his own intended reference--to The Ascent of Man, a TV series by Jacob Bronowski that impactedContemplating the title of this book, my first thought was that it was by a person of the political left, maybe not the Pope, but an anti-capitalist and moralizer on the all-around evil of the financial system.

"No," said the person who recommended it to me; "He's center right."

So, then I saw the title as deriving from the bad-boy mentality of the author, thumbing his nose at such views. The author has his own intended reference--to The Ascent of Man, a TV series by Jacob Bronowski that impacted him in his youth. But the first two chapter titles, "Dreams of Avarice" and "Of Human Bondage," did nothing to change my impression.

Also, this book is based on a television series, which is, in fact, what I originally set out to watch. And in the series, the author is strutting around, looking very much like a "master of the universe" wannabe (or, to use the old Salomon Brothers' self-descriptor that he quotes, a "Big Swinging Dick").

His presentation notwithstanding, Ferguson isn't an economist or financier but a historian and professor. Yet the teaching wasn't getting across. I must have been looking around online; that's when I discovered there is a book.

From that first chapter, about the origin of finance, I learned that the root of "credit" is in "credo," the Latin for "I believe," and that when Shylock calls Antonio "a good man," he means, not his virtue, but his creditworthiness. And that--the conjoining of goodness with creditworthiness--echoed subsequently in the institutionalized racism of red-lining in the 1940s, whereby African-Americans were deemed "uncreditworthy" (in Chapter Six), and, again, near the end of the book, where the author uses a dollar amount to express what a person would have been "worth," had he pursued a certain investment strategy.

The author also touchs on the legal fictions required to avoid running afoul of usury laws against the earning of interest--laws that remained in effect in England until 1833. Examples are the repaying a loan with the inclusion of a percentage of the gains, or the purchase of streams of annuity (if I remember correctly, the latter being one of Voltaire's methods.) ...And there's the Medici's rise via finance from small-time hoodlums to popes, royalty, and arts patrons. "Bank" is from "banci," Italian for "benches," on which the earliest bankers ("banchieri") sat behind their tables. ...And how precious metals do not define what money is. In fact, the importing of mountains of silver into Europe by the conquistadors changed what had been thought to be "the" worth of products: so much silver poured into the economy that there was inflation.

And he talked somewhere about how loans "create" money. You put your money in a bank. So you have that much money. And the bank lends it to someone else. Now that person has that amount of money, too. Presto--more capital! Or, more properly speaking, the depositor and the borrower can each take that money and build or make something. Although the borrower's position is balanced by debt, still, each has the use of the money.

In the afterword, the author defines money as "the crystallized relationship between debtor and creditor"--but isn't that only because he's focusing on finance? It seems to me it would be more basic to say it's the crystallized relationship between buyer and seller. (My husband is gloomily shaking his head while saying he doesn't know enough to comment, so I've probably gotten onto shaky ground.)

My favorite chapters were Chapter Four, "The Return of Risk," and Five, "Safe as Houses." In the former, I wondered why, at the beginning, he was making statements I expect to hear from the political left, such as that financial difficulties are more likely at present due to climate change and "American foreign policy blunders," and quoting Naomi Klein. He talked about risk, using as an illustrative case the uninsurability of parts of New Orleans post-Katrina. He also looked at the problem of inflation in the '70s in a one-sided way, it seemed, positing Milton Friedman as the savior and "socialism" as the enemy. At the end of that chapter, he said the answer to the problem of risk lies in futures, options, and hedge funds, albeit an answer available only to those with money. And that was his answer to his rhetorical leftist references to risk at the beginning of the chapter.

For the rest, there are--houses. Chapter Five begins with the story of Monopoly (the game): invented by a radical who wanted to preach against the uses of money, but turned into a glorification of same by a later developer. The game became so ubiquitous that it was used in WWII to smuggle real cash to spies behind enemy lines.

Ferguson makes clear that, although the owning of homes benefits capitalist democracies, the expression "safe as houses" applies to the lender, not the buyer. The lender can reclaim the property should the borrower default, since you can't pick up your house and abscond with it. What the purchaser must have is an income. Then, and only then, is he home safe.

And, back to the '40s and before, that was when, in the words of a friend of mine, FDR "saved capitalism." In 1932, in the midst of the Depression, Ford Company goons fired on 5000 demonstrating unemployed workers, killing five, and before long 60,000 workers were singing "The Internationale" at the funeral. The New Deal became answer to such unrest--as did the creation of affordable long-term mortgages and federal deposit insurance.

The chapter ends with safe as--not houses--but "housewives," and the merits of microfinance. Women stay home, use, not squander, the money, and pay it back. (Elsewhere I've read of the similar merits of educating women.) But even in microfinance exorbitant interest rates have arisen, supposedly as the only way to make money on a multiplicity of tiny loans.

Although "Safe as Houses" presents the risk to capitalism, the author never puts together in a coherent way that classic liberalism, in the sense of absolutely free markets, sans any sort of planning or mitigation of the travails of "the masses," would lead to just the sort of uprising he describes as having happened back during the Great Depression.

The last chapter, "Chimerica," deals with the Great Recession of 2007 and the relationship between the U.S. and China. They save, they lend us lots of money; awash in all that money, "subprime" loans were made to people with no jobs, no assets, and no prospects--for which he fingers "W." (Take that, you conservative accusers!) Apparently no one knew that defaults on subprime mortgages would shake the international economy and affect people half a world away.

The author talks about the era of globalization that preceded WWI, characterized by imperialism and gunboat diplomacy, of which one low point must be the forced creation of an opium market in China for the merchandise produced in India under British auspices. In light of that, our present status as the drug market for the "developing world" doesn't seem so wrong. Turn and turn about is only fair.

Ferguson quotes some of the financial elite of the Victorian era--that prior era of globalization--as saying war would be a disaster, but most of them were saying it couldn't happen; the world was just too interconnected. Of course, he's comparing that to our own globalized times. Then, Britain was paired with Germany as the U.S. is with China now. (But his picture neglects to touch on the pervasive belief that Europe needed war to cleanse or purify itself, that I've picked up from other sources.)

Markets have short memories. Workers in the financial sphere have careers of around 25 years. English-speaking westerners feel so secure. They are lacking in imagination, and they are complacent. The author closes with a review of economic thinkers such as Nassim Nicholas Taleb (Fooled by Randomness and The Black Swan) and Daniel Kahneman. He's looking here at the hard-wired irrationality that calls into question all economic forecasting--without the benefit of hindsight, that is.

Niall Ferguson's TV series as it was shown in England is available on YouTube. There was also a four-session NPR showing but we were lucky to end up with the six sessions that matched up with the six chapters. The book goes into more detail--sometimes confusing, as when terms are defined on the show but not in the book. The book tends to contain jargon not readily understandable to the uninitiated--sometimes unintentional but sometimes, just maybe, intended to mystify. For example he says countries with financial intermediation do better than those with other systems such as feudalism or central planning. The latter is a code expression for communism. Is the former a code for capitalism?

The book suffers from the severing of finance and commerce, as they are intertwined and interrelated, and as commerce, as well as finance, started off being in a bad light.

This book purports to be, per the subtitle, a "financial history of the world," but, if so, only in the sense of the special events and highlights that illustrate the rise, in historical succession, of banks, government bonds, markets for securities, the stock market, insurance and pensions, derivatives, and, finally, the political encouragement of home ownership.

It is a history in the sense of a 1926 book I had from my mother and uncle as a child in the '50s--"The First Days of Man"--that had chapters with such titles as "How Mother Nature Made the Earth Ready for Man," "The Fish that Got Stuck in the Mud," and "The Ape that Walked Like a Man." One can fit some more pieces into the puzzle, but won't find a comprehensive picture that provides massive new insights.

Taking Niall Ferguson at his own word, here's his view of money:

(F)ar from being 'a monster that must be put back in its place,' as the German president recently complained, financial markets are like the mirror of mankind, revealing every hour of ever working day the way we value ourselves and the resources of the world around us.

It is not the fault of the market if it reflects our blemishes as clearly as our beauty.

The Ascent of Money was published in 2008, a year into the "Great Recession."

Postscript: Are there no other paintings of the exchange of money? This book uses on its cover the very same one that is on the cover of The Mind and the Market....more

4.0 stars. I am a big fan of Niall Ferguson and this book certainly added to my appreciation for both his skill as a writer and his knowledge of history, especially financial history. After spending the early portion of the book on the history and development of currency, this book becomes a brief look at the origins and development of the major financial institutions (banks, commodity exchanges, hedge funds, insurance companies) and categories of assets (bonds, stocks, real property, options an4.0 stars. I am a big fan of Niall Ferguson and this book certainly added to my appreciation for both his skill as a writer and his knowledge of history, especially financial history. After spending the early portion of the book on the history and development of currency, this book becomes a brief look at the origins and development of the major financial institutions (banks, commodity exchanges, hedge funds, insurance companies) and categories of assets (bonds, stocks, real property, options and derivatives). For each of these various categories, Ferguson provides the historical background that led to their development as well as the benefits and problems that came along with each.

A well researched, well written survey of financial history and an interesting read. ...more

This is a very readable and enjoyable financial history for a layman like me. Like most of the members of the general public, generally I have no interest in financial history, considering it complicated, mundane, boring and dry. However, the recently financial meltdown piqued my interest on this topic.

This book described the development of modern finance and banking system, staring from Renaissance Italy, the Medici family, the rising of the Rothschild family after the Waterloo, all the way doThis is a very readable and enjoyable financial history for a layman like me. Like most of the members of the general public, generally I have no interest in financial history, considering it complicated, mundane, boring and dry. However, the recently financial meltdown piqued my interest on this topic.

This book described the development of modern finance and banking system, staring from Renaissance Italy, the Medici family, the rising of the Rothschild family after the Waterloo, all the way down to the current crisis triggered by the sub-prime mortgage meltdown. It is especially interesting to read the accounts of S&L crisis of 1980s and 1990s, appreciating its relevance to the current crisis.

It is especially interesting to notice the similarities of all the bubbles in history, from the famous Dutch Tulip Mania, British South Sea bubble, French Mississippi Bubble, Great Depression, S&L crisis, and finally, the current financial meltdown. It seems bubbles can never be prevented. Interestingly, a recently Atlantic Monthly article penned by the (in)famous Henry Blodget, "Why Wall Street Always Blows It", contemplated on this very topic and concluded that bubbles are unpreventable.

I was recently referred to this book by Goodreads friend Roz, who didn't know that I'd already read it. For those who don't know Ferguson he's a prolific but right wing historian who is a regular face on British TV's channel 4 with series like EMPIRE, AMERICAN COLLOSUS and THE THIRD WORLD WAR. I don't agree with Ferguson's project, particularly his defence of Thatcher, but his histories pose important questions even though they lack a central Marxist focus on class. Ergo, attempts by many Left wI was recently referred to this book by Goodreads friend Roz, who didn't know that I'd already read it. For those who don't know Ferguson he's a prolific but right wing historian who is a regular face on British TV's channel 4 with series like EMPIRE, AMERICAN COLLOSUS and THE THIRD WORLD WAR. I don't agree with Ferguson's project, particularly his defence of Thatcher, but his histories pose important questions even though they lack a central Marxist focus on class. Ergo, attempts by many Left wing critics to sleight Ferguson (as in New Left Review a few years back) usually fail because they can't accept Ferguson's correct observation (which he can't explain) that colonial peoples are always worse off under their indigenous bourgeoisie than under British colonialism. The essential companion piece to Ferguson is of course Trotsky's The Permanent Revolution, Harry Isaacs' The Chinese Tragedy and anything by CLR James.In The Ascent of Money, Ferguson tries to attack Marxism more directly but fails to provide a superior analysis to that in Capital, which deals with money as a universal equivalent commodity representing exchange value ...more

Roger CottrellYou're welcome, Brad. I actually wrote this a while ago but still stand by y analysis.
Sep 03, 2010 11:07PM

Rebecca WentworthThe right wing part was hugely evident to me as he left out how money has been used to redistribute wealth. The other big blind spot is the effect ofThe right wing part was hugely evident to me as he left out how money has been used to redistribute wealth. The other big blind spot is the effect of compound interest on the natural growth of industries....more
Nov 21, 2014 06:04AM

The "Ascent of Money" had a subtle right-wing/conservative bent to the point that as the events became more recent, I found more and more questionable "facts" and right-wing "talking points". For example, as a follower of Paul Krugman's economics blog, I know at least one thing Ferguson says about him is a lie that has been perpetuated by certain Republicans. And his analysis of the recent (2007) mortgage/housing crisis is factually incorrect although is a common version reported by conservativeThe "Ascent of Money" had a subtle right-wing/conservative bent to the point that as the events became more recent, I found more and more questionable "facts" and right-wing "talking points". For example, as a follower of Paul Krugman's economics blog, I know at least one thing Ferguson says about him is a lie that has been perpetuated by certain Republicans. And his analysis of the recent (2007) mortgage/housing crisis is factually incorrect although is a common version reported by conservative news outlets.

The problem with using disputed facts and explanations (regardless of whether they are ultimately true or not) is that it calls into question the rest of the historical facts and analysis in the book. If the parts I personally have researched and have knowledge of are questionable, I am finding I cannot trust the rest of the book.

This book is a fun read but given the problem with some of the facts and analysis in the 20th and 21st century parts, I don't think I'd recommend this book to others....more

I was listening to this audiobook on a CD player, and my husband said, "Is a man with a plummy English accent explaining the plot of Mary Poppins to you?" (Yes. You may not remember the part where the little boy wants tuppence to feed the pigeons and inadvertently triggers a bank run.)

Harvard history professor explains the origins of not only coins, paper money, and electronic money, but also stocks, bonds, and insurance. (Bonds and insurance are way more important than I had realized.) Very helI was listening to this audiobook on a CD player, and my husband said, "Is a man with a plummy English accent explaining the plot of Mary Poppins to you?" (Yes. You may not remember the part where the little boy wants tuppence to feed the pigeons and inadvertently triggers a bank run.)

Harvard history professor explains the origins of not only coins, paper money, and electronic money, but also stocks, bonds, and insurance. (Bonds and insurance are way more important than I had realized.) Very helpful for a nonexpert like me; probably too basic for someone with academic training.

Here are some interesting facts I learned:

• Incan society did not include the concept of money. The Inca thought silver was beautiful and knew how to make it into things, but they couldn’t figure out why the Spaniards wanted mountains of it.

• Spain extracted so much silver from the Americas that they inadvertently lowered the price of silver substantially. Which goes to show you that money is worth only what someone will trade you for it.

• The Dutch invented the stock market, but it took a Scotsman (gambler/wife-stealer/duelist/convicted murderer John Law) and a Frenchman (the heavily indebted Louis XV) to invent the stock bubble.

• Possibly the best name ever: Richard Plantagenet Temple-Nugent-Brydges-Chandos-Grenville, 6th Viscount Cobham and 2nd Duke of Buckingham. He was a British nobleman who owned 67,000 acres in three countries but spent so freely that his son ended up wresting control of the estate and selling everything in his dad’s house that wasn’t nailed down (and some things that were). Lesson: “It’s not owning property that gives you security; it just gives your creditors security. Real security comes from having a steady income.”

• There used to be two Harrods department stores in the world: one in London and one in Buenos Aires.

• Inflation in Argentina was so bad that one day the government literally ran out of money.

KristinThe Dutch--although they didn't invent the bubble, they kind of helped with it. They did invent the stock market crash, what with the tulip mania. TulThe Dutch--although they didn't invent the bubble, they kind of helped with it. They did invent the stock market crash, what with the tulip mania. Tulips. Geez. How charming.

And yes, any name that contains "Plantagenet" is an automatic possible best name ever. But Richard truly is a contender....more
Dec 20, 2011 07:03PM

Money does not make the world go round, but it does make staggering quantities of people, goods and services go around the world.

Money ....Money ...Money....

The Ascent of Money: A Financial History of the World by Harvard professor Niall Ferguson, examines long history of money, credit, and banking. Since this book is all about history don’t think it’s dry and unreadable... it very readable, interesting and with substance. The most interesting thing about this book which I felt is the blend of WMoney does not make the world go round, but it does make staggering quantities of people, goods and services go around the world.

Money ....Money ...Money....

The Ascent of Money: A Financial History of the World by Harvard professor Niall Ferguson, examines long history of money, credit, and banking. Since this book is all about history don’t think it’s dry and unreadable... it very readable, interesting and with substance. The most interesting thing about this book which I felt is the blend of William Shakespeare play The Merchant of Venice to explain the rise of loan sharks and development of loan term or "usance".

Being a Trade Finance professional I never thought of development of loan term/tenor which we use on daily basis. Most of the finance which we do covers the shipment period i.e., from the time of loading to discharge....not even once i have thought of the tenor which is used in William Shakespeare play The Merchant of Venice a typical Trade Finance Loan.

Following 'Empire of Wealth' I decided to try and grow my knowledge a little bit on the subject of finance. Having greatly enjoyed Niall Fergesun's previous work, I thought this would be a great way to go. And, in essence, it was.

However, what this book doesn't tell you is that it's written for someone with a much higher understanding of global finance than I currently posess. I'm a financial and economic newbie, having only read Empire of Wealth and little else to increase my understanding of tFollowing 'Empire of Wealth' I decided to try and grow my knowledge a little bit on the subject of finance. Having greatly enjoyed Niall Fergesun's previous work, I thought this would be a great way to go. And, in essence, it was.

However, what this book doesn't tell you is that it's written for someone with a much higher understanding of global finance than I currently posess. I'm a financial and economic newbie, having only read Empire of Wealth and little else to increase my understanding of the subject. Some of this book was very interesting, and I will admit that if you're willing to drudge through the man talking about the inflation rates of shares between 1789 and 1810, you will learn a lot about the general ideas, concepts and history that goes into each of these differnet ideas.

While this is sold as a 'financial history of the world' in fact this book reads more like a history of each aspect of finance - insurance, markets, bonds, etc. Chapters are seperated by each of these ideas and not by time. Again, if you have general understanding of all of this stuff and a mind of numbers, you could come out of this book like a King. I came out of it like a lesser noble. ...more

I came by this book via finding the PBS 4-part series up on pbs.org, which I have recently discovered as a goldmine of missed NOVA and Nature shows, free to watch online. I watched the TV shows first, and picked up the book from the library to see if it would add depth.

I am quite weak on financial history, so this book made an excellent beginning remedial course. I don't think one should stop here, however. But I did find FergusoI came by this book via finding the PBS 4-part series up on pbs.org, which I have recently discovered as a goldmine of missed NOVA and Nature shows, free to watch online. I watched the TV shows first, and picked up the book from the library to see if it would add depth.

I am quite weak on financial history, so this book made an excellent beginning remedial course. I don't think one should stop here, however. But I did find Ferguson's account of the evolution of the sometimes-bewildering financial institutions that shape our lives to give me a helpful framework. (I find the bond market particularly mysterious, although even that paled when I hit the parts about hedge funds.) The early history was the most graspable -- the past 30 years, less so. I found his summation in the Afterword of the recent work done in psychology to be the most biting critique of a lot of academic economic thinking.

Written in a lucid and entertaining style for the most part, with the heaviest sledding being in the most recent history. (This book was written just at the verge of the most recent market meltdown/recession of the mid-late Oughties.) Since, as a self-employed person, I manage my own retirement savings, it really behooves me to find out more, I suspect. But I must say, the more lurid early history was the best part from the point of view of a writer. John Law, good grief! I couldn't make him up. One can pretty much take the TV show as "the good parts version", if one only has time for a single pass.

Another book of which I was reminded while reading this was Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay, also highly recommended; among other things, it has an account of the Dutch tulip mania, one of the world's first classic market bubbles.

The is a very interesting take on the role of money in world history. Ferguson tracks the evolution of the financial world right up to the present economic crisis. He writes very well and weaves in how other historic events were triggered or enabled by changes in how money works. Even if one challenges some of the opinions in the book, it is very thought provoking.

Given everything that is going on around us these days, this is an excellent read. Highly recommended.

Most people - or at least me (I?) - know this guy as a purveyor of some outrageous opinions (Keynes was wrong, because he was gay, or something?) and partisan talking points, and his questionable approach to fact-checking was recently highlighted by Jonathan Chait at New York magazine. Still, with one exception (an arch criticism of the excesses of the welfare state, and their putative role in the stagflation of the '70s), this is a surprisingly balanced, entertaining and illuminating history ofMost people - or at least me (I?) - know this guy as a purveyor of some outrageous opinions (Keynes was wrong, because he was gay, or something?) and partisan talking points, and his questionable approach to fact-checking was recently highlighted by Jonathan Chait at New York magazine. Still, with one exception (an arch criticism of the excesses of the welfare state, and their putative role in the stagflation of the '70s), this is a surprisingly balanced, entertaining and illuminating history of the development of the modern monetary and financial system (the title is a nod to Jacob Bronowski's The Ascent of Man, a formative influence on the author). Ferguson shows how banking and credit came about, how sovereign bond markets affected the rise of nations (and their recalcitrant, spendthrift kings), and the rise of speculative bubbles, including the 2008 mortgage crisis. Even those unsympathetic to the classically liberal tendencies of the author would find in this book much to recommend it. ...more

Money's money, right? Wrong. My sister told me that "Life is like a sh*t sandwich, the more bread you have the less sh*t you eat." (True unless you're Sunny Von Bulow.)

Niall Ferguson focuses his history of the world on its finances. He succeeds in explaining the origins, evolution, and present state of currency, bonds, stocks, insurance, property, and financial wizardry. There's plenty I still don't know, but looking at the world through the prism of money usually explains a lot. And while KarlMoney's money, right? Wrong. My sister told me that "Life is like a sh*t sandwich, the more bread you have the less sh*t you eat." (True unless you're Sunny Von Bulow.)

Niall Ferguson focuses his history of the world on its finances. He succeeds in explaining the origins, evolution, and present state of currency, bonds, stocks, insurance, property, and financial wizardry. There's plenty I still don't know, but looking at the world through the prism of money usually explains a lot. And while Karl Marx didn't get rich from doing it, he too thought it was a pretty darned important way to interpret events.

Ferguson is no Marxist. He believes that it is the lack of credit that leads to intractable poverty, such as racist blue-lining African-American neighborhoods so that they never had local banks to get mortgages from or paid higher rates for loans than whites. Nor does he spend much time on the evil and oppression that has been carried out in the pursuit of super-profits.

But what he does do is unravel the mysterious nature of capital. The book is brand new and the melt-down of 2008 was just getting started when it went to press. However, Ferguson gives us a paradigm to understand the magnitude and the origins of the depression that the world is in.

After reading the book it's hard not to thing of all of banking, stocks, and finance industry as a giant Ponzi scheme that is finally coming due.

Still, I just keep thinking about that sh*t sandwich that's coming our way....more

I expected this book to give a good insight (as opposed to a comprehensive history due to its length) on how the monetary and financial systems developed throughout history. It is instead a series of historical anecdotes thematically combined on each chapter. Some of them are really informative (the ascent of the Rothschilds), others are downright superficial and inaccurate.

The political and economic doctrines of the author are obvious in the reading of the book, as pointed out by other reviewsI expected this book to give a good insight (as opposed to a comprehensive history due to its length) on how the monetary and financial systems developed throughout history. It is instead a series of historical anecdotes thematically combined on each chapter. Some of them are really informative (the ascent of the Rothschilds), others are downright superficial and inaccurate.

The political and economic doctrines of the author are obvious in the reading of the book, as pointed out by other reviews. There are some instances that, however, exhibit lazy research and/or bias. The description of the economic policies during Pinochet's dictatorship and Friedman's Chicago Boys is an example. Any historian knows by now that the "miracle" was not such, and the long term economic prosperity in Chile really started by the less rigid doctrines of the Minister of Finance Hernán Büchi in the mid/late 1980' and by the democratic governments post-dictatorship. The rigid doctrinal policies of the Chicago Boys only generated one of the worst Chilean economic crisis in 1982.

This book is and easy read and has some interesting facts and stories, but lacks the depth and insight of a good historical book....more

Engaging book, although it does not add much to the TV documentary, which is available through the PBS website and also on YouTube. However, I was sufficiently impressed by the book and a couple of his essays in Vanity Fair that I plan to read more of Ferguson's work. I ordered the "Cash Nexus" and, maybe, if I have a long illness, I'll also read his book on the Rothschilds. A brilliant man, though perhaps a trifle self-aggrandizing. He claims, for instance, to have predicted the housing collapsEngaging book, although it does not add much to the TV documentary, which is available through the PBS website and also on YouTube. However, I was sufficiently impressed by the book and a couple of his essays in Vanity Fair that I plan to read more of Ferguson's work. I ordered the "Cash Nexus" and, maybe, if I have a long illness, I'll also read his book on the Rothschilds. A brilliant man, though perhaps a trifle self-aggrandizing. He claims, for instance, to have predicted the housing collapse, although a cursory glance at the publications he has on his home page does not bear this out. I noticed also in his TV shows how he tends to picture himself perusing a dusty manuscript in some faraway corner of the world to indicate that all of what he is expounding is personal research rather than stuff his assistants dug up for him from the secondary bibliography. All in all, he may become a public intellectual capacble of synthesizing large issues for a general audience, which is nothing to sniff at....more

I caught one and one-half episodes of the TV series of the same title on PBS a month or so ago. I read the book hoping for more context and depth on the concepts presented in the show. In general, I was not disappointed.

As a historical overview, it touches on the earliest forms of exchange (and money) as well as the development of various financial schemes and instruments over the past two thousand years. Given that it was written to accompany the development of the series, it probably containsI caught one and one-half episodes of the TV series of the same title on PBS a month or so ago. I read the book hoping for more context and depth on the concepts presented in the show. In general, I was not disappointed.

As a historical overview, it touches on the earliest forms of exchange (and money) as well as the development of various financial schemes and instruments over the past two thousand years. Given that it was written to accompany the development of the series, it probably contains the right mix of facts, explanation, and anecdotes. I'm sure that most people "snagged" by the show will enjoy this book. If you know little or nothing about the various financial institutions that surrounds us, this will give you a good introduction to what they do (or are supposed to do), how they started, and how they related to other monetary methods and entities.

I like the author's writing style (breezy though it is) and his use of historical example. I only have two complaints.

1) I would like a longer book, with more information about how specific tools are being used today and how they are continuing to evolve. Rather than just a description of something (e.g. stripping off interest to market as a "derivative", or interest rate swaps), I'd like to see the author cover why people use these instruments, or, how they decide that this is the correct choice for their portfolio (or their institution). Granted, it may only be one more opinion about such things, but I was hoping to contrast his understanding and my own.

2) It was written 6-9 months too early. The nexus of the financial crisis (dare I say collapse) that occurred during the past 12-18 months was just beginning to take full form. There are several suppositions floated based on the information available at that time, but they are only "teasers" now that we know how things actually went. Let's hope that he chooses to write a non-TV book and picks up the tale from where he left off....more

First, a complaint: This is hardly a history of monetary forms and use. Although Ferguson does discuss some of this early on in his book, everything after the first chapter is devoted to monetary policies and practices, and the rise of capitalism since the Renaissance.

One of Ferguson’s driving points is made early on, and is repeated throughout his book. That is, he vehemently and persuasively argues that capitalism – to riff Churchill’s critique of democracy – may be a horrible form of economiFirst, a complaint: This is hardly a history of monetary forms and use. Although Ferguson does discuss some of this early on in his book, everything after the first chapter is devoted to monetary policies and practices, and the rise of capitalism since the Renaissance.

One of Ferguson’s driving points is made early on, and is repeated throughout his book. That is, he vehemently and persuasively argues that capitalism – to riff Churchill’s critique of democracy – may be a horrible form of economics, but it is the best we have so far in the course of human history. He eloquently states that

"Credit and debt, in short, are among the building blocks of economic development, as vital to creating wealth of nations as mining, manufacturing or mobile telephony. Poverty, by contrast, is seldom directly attributable to the antics of rapacious financiers. It often has more to do with the lack of financial institutions, with the absence of banks, not their presence."

Much to his credit, Ferguson is right on the mark when you consider the predatory lending practices of fly-by-night banks, mortgage companies, and – the worst offender of them all – pay-day loan sharks.

Ferguson peppers his book with numerous scandals and historical characters that illustrate the precariousness of capitalism as it developed out of the wreckage of feudal Europe: Confederate cotton bonds, the Rothschild banking family, John Law’s Mississippi Company, Enron and Kenneth Lay, Milton Friedman, the Savings and Loan scandals and Danny Faulkner, mortgage practices after WWII that were effectively racist against blacks, NINJA loans in recent years (No income, no job or assets), and the list goes on.

While an advocate of capitalism at its best, Ferguson doesn’t shy away from blasting out of the water the notion that capitalism is Darwinian in nature, by allowing the best and fittest to survive.

"There is…a big difference between nature and finance. Whereas evolution in biology takes place in the natural environment, where change is essentially random (hence Richard Dawkins’s image of the blind watchmaker), evolution in financial services occurs within a regulatory framework where – to borrow a phrase from anti-Darwinian creationists – ‘intelligent design’ plays a part. Sudden changes in the macroeconomic environment, which are analogous to environmental changes in the natural world. The difference is once again that there is an element of endogenity in regulatory changes, since those responsible are often poachers turned gamekeepers, with a good insight into the way that the private sector works. The net effect, however, is similar to climate change on biological evolution. New rules and regulations can make previously good traits suddenly disadvantageous. The rise and fall of Savings and Loans, for example, was due in large measure to changes in the regulatory environment in the United States."

Or, in simpler words, once a regulatory system is functioning profitably, the sharks and poachers will find a way to manipulate the loopholes and suck the system dry. (Think Enron and, more recently, the notorious Bernard Madoff.) Regulation should be just as dynamic as capitalism itself; with constant reevaluation of practices and policies.

Although there were a few parts that were utterly baffling – most notably Black and Scholes “quants” formula for determining stock option pricing – Ferguson’s writing is clear and his examples concrete and well-illustrated. For a general survey of the history of real estate, bonds, stock markets, investment practices (especially the recent advent of collateralized debt obligations that precipitated our recent economic recession), The Ascent of Money can’t be beat. ...more

Recommends it for: Econ faculty to add to their syllabus as recommended reading

Solid research (lots of footnotes), almost too much detailed stats at some points, and excellent writing (e.g., short sentences) are the strength of this book. It reads similar to a somewhat disparate collage of econ/finance/policy articles from the Economist, or the New Yorker, or Times. That takes a star off for me. There might be a lot of attention to Long Term Capital, Hurricane Katrina, professor DeSoto's work in Peru and South America, British landowners in the 1800's, and the poor in DetrSolid research (lots of footnotes), almost too much detailed stats at some points, and excellent writing (e.g., short sentences) are the strength of this book. It reads similar to a somewhat disparate collage of econ/finance/policy articles from the Economist, or the New Yorker, or Times. That takes a star off for me. There might be a lot of attention to Long Term Capital, Hurricane Katrina, professor DeSoto's work in Peru and South America, British landowners in the 1800's, and the poor in Detroit or Memphis (subprime mortgages). But I kept thinking "wow, this is interesting, but why is he focusing so much on this topic which may not have segued well from 2 prior topics?"

Very loosely this "ascent of money" starts about 500 years ago in his book (with bulk of pages covering the last 20 years): money leads to banks, eventually you get to governments issuing bonds, then private firms issue stock, then risk is shared with advent of insurance companies, then futures and options, and unwarranted tilt to highly levered investments in real estate.

Couple of things he made clearer: "Chimerica" (linkage of China the maker and lender with US the buyer and borrower... and he speculates the next great war possibly could be between these 2!); that LTCM's demise was they bet wrong on an increase in stock volatility in 1998 having sold ton of options; "NINJA" were the poor folks who were the predominant borrowers using subprime mortages (no income, no jobs and no assets), and folks well trained in financial history have seen lots of Black Swans!...more

Niall Ferguson makes a strong, compelling case for the development of money and banking as a catalyst for the advancement of civilization. Yet while some critics praised his clear, comprehensible writing, punctuated with anecdotes and historical details, others were nonplussed by his explanations and narrative detours. Several critics also bemoaned the book's choppy and uneven structure

For those of us who never took an economics course in college this is a great book. Its scope seems overly ambitious (a history of the world as told through money and finance), but it in fact tells exactly that story, and while there are some necessarily broad strokes at times, the book does not shy away from getting into the gritty details when necessary. It certainly demands some attentive reading when it delves into some of the more complicated concepts of the late 20th century financial abstFor those of us who never took an economics course in college this is a great book. Its scope seems overly ambitious (a history of the world as told through money and finance), but it in fact tells exactly that story, and while there are some necessarily broad strokes at times, the book does not shy away from getting into the gritty details when necessary. It certainly demands some attentive reading when it delves into some of the more complicated concepts of the late 20th century financial abstractions.

Though he doesn't belabor the point (and it might deserve belaboring) you can't help but be struck by lockstep development of finance to augment military conquest. It seems every innovation in finance has served to expand the scope of war. Maybe I'm just naive.

There are other stories that were missing from this book that I wish had been addressed. It focuses on the current system of finance and banking but tells the history of the current system. I wanted more historical coverage of other systems of money and lending that got drowned out by the current system over the centuries. Maybe that would have been a different book altogether, but as it is, his story reads as if money, banking and finance developed in Europe while the rest of the world had no concept of these things....more

Excellent book if you want to understand how finance got its all-important role in the world today, from Sumerian clay tablets representing tradable IOUs up to the recent financial crisis. Niall Ferguson manages to do this in an understandable and accessible way that is at the same time also very entertaining, compelling and filled with fun anecdotes. I especially like the slightly irreverential and provocative tone that he maintains while demystifying the "secrets" of the financial world. In myExcellent book if you want to understand how finance got its all-important role in the world today, from Sumerian clay tablets representing tradable IOUs up to the recent financial crisis. Niall Ferguson manages to do this in an understandable and accessible way that is at the same time also very entertaining, compelling and filled with fun anecdotes. I especially like the slightly irreverential and provocative tone that he maintains while demystifying the "secrets" of the financial world. In my opinion this is an important feature when describing a world that is often characterized by a lot of false pretenses and posturing.

The only criticism I can think of is that he sometimes over-eggs it a little and writes as if he has to give an entertaining talk, which frankly I don't mind so much because it helps me to stay focused. Also he tends to get more technical when describing recent financial history after World-War II. In that part I several times had to look up a word to understand what he was talking about. But otherwise this has been an excellent read that brought everything I had hoped for and more. If you are thinking about buying the book I can advise you to look at some talks by the Author on YouTube. Niall the speaker is not that different from Niall the writer....more

I had always wondered what would literature on financial history be like. I mean developed financial markets could not be more then 100 years old, can they? The answer is most definitely yes. Who better to explain them then a historian.

Niall Ferguson has put together an impressive piece of literature on financial history which dates back to early 13th century to the last year's sub-prime crisis. The book has some very clear and precise historical facts with in-numerable quotations (for people whI had always wondered what would literature on financial history be like. I mean developed financial markets could not be more then 100 years old, can they? The answer is most definitely yes. Who better to explain them then a historian.

Niall Ferguson has put together an impressive piece of literature on financial history which dates back to early 13th century to the last year's sub-prime crisis. The book has some very clear and precise historical facts with in-numerable quotations (for people who care about cross checking the facts). He has done a very good job of interweaving the time-lines with major financial products break-through (although the integration loosens in the end when you feel you have been lured to a new topic without an absolute closure to the current topic). I always found text book history boring, but text book editors clearly did not have Niall's skills at inter-weaving facts in a logical but not necessarily chronological order.

The book does end from historical facts to Niall's doomsday hypothesis on a much debated topic in recent times (Chimerica), though to his credit he seems convincing. A very good read for anyone who likes to know how stuff have evolved over time, especially financial stuff....more

Another tour de force of world history, this time focusing on financial history, a topic that everyone who has been hit in some way by the current recession should be looking into. Once again going against the grain, Ferguson argues that money and the subsequent institutions and promissory notes that have been used to save or create more money are the keys to national wealth and expansion, not their destruction. In fact, whenever he traces the rise and fall of vast fortunes throughout history, iAnother tour de force of world history, this time focusing on financial history, a topic that everyone who has been hit in some way by the current recession should be looking into. Once again going against the grain, Ferguson argues that money and the subsequent institutions and promissory notes that have been used to save or create more money are the keys to national wealth and expansion, not their destruction. In fact, whenever he traces the rise and fall of vast fortunes throughout history, it only serves to add to his argument that constantly evolving financial markets pave the roads towards progress. His narrative on chapter two about the French bond market bubble in the early 18th century is a good example of this. However, where Ferguson stumbles, in my opinion, is in his lack of explanation regarding basic economic terms and principles. He knows what he's subject and I got most of what he was saying, but there were times I was left scratching my head trying to figure out what he was talking about. If you don't know anything about business or economics, I recommend borrowing a basic econ. textbook or a dictionary on business and econ. terms. In conclusion, this is a wonderful book on the financial history of the world and very pertinent for our times....more

This is one of those rare books that you read not just once but you (a) have to own a copy of it, (b) have to buy a copy and necessarily gift to everyone that you know and their sister in law, (c) and upon reading it, simply feel utterly stupid that there are so many things about the financial world - so completely basic - that one ought to have known but one just doesn't.

Niall Ferguson brings an innate sense of timing, weaves storylines like they are part of a film noir thriller, and quotes soThis is one of those rare books that you read not just once but you (a) have to own a copy of it, (b) have to buy a copy and necessarily gift to everyone that you know and their sister in law, (c) and upon reading it, simply feel utterly stupid that there are so many things about the financial world - so completely basic - that one ought to have known but one just doesn't.

Niall Ferguson brings an innate sense of timing, weaves storylines like they are part of a film noir thriller, and quotes some of the most intriguing facts to showcase a rich tapestry of the financial world from times past to the rich complexity that we see today (not to mention the aggressive shambles that much of today's world is in as we speak). While it is a historian's mission to run through a longitudinal story of any event or phenomenon it is the rare one that does it with a sensibility that forges fact, lore, creativity, and entertainment into a seamless progression towards a big picture perspective. For example, who knew that the French revolution was caused not by political hand wringing among infighting legions rather than a louche Englishmen [aren't they all? :-) ] who was convicted of murder and then decided to emigrate to France to trade in bonds and engage in other speculative enterprises. And where else is there, in one place, a succinct account of the raison d'etre of some of our current financial institutions (Fannie, Freddie, Ginnie etc.) and how they have contributed to the current crisis by recklessly engaging in the market for secondary mortgage markets?

If there is one concern in this book it is that this historical compendium of financial events seems to be focused on specific individuals and the institutions at large per se. Nowhere (or at the most in a few pages) is there a searing indictment of what we, as a public, have done to orchestrate and inflict these greivous injuries on ourselves. Where is there a need to blame companies like Enron solely when the average investor ought to know better and not put all their 401k holdings in one stock - especially the one they work in? While this is a minor flaw and not one that is likely to detract from the overall mission of the book to educate it is about time that someone as high profile as Ferguson calls it out in his writings. After all, the history of financial collapses (and to be fair, soaring achievements) could only have been possible with the appalling (and other times thoughtful) complicity of the public which had a hand based on a perverted sense of short term self interest.

All in all, this is one of those books that, for me at least, took at least two times to read to grasp the enormity of our financial history. It is also a bit west-centric in that there is not much mention, in proportion, of the contribution of the Eastern civilizations to how money and investments were viewed. While it is commendable enough to read it and enjoy it once, we would be doing a lot more justice by buying a reference copy and perusing it time and time again in an effort to understand our place in history as well as using it as a primer to underscore how our own actions and deeds contribute to or detract from a robust financial system....more

This book is very timely. The state of the economy has been on my mind a lot, as with many people. Ferguson paints the total historical picture of money, and its relationship with society. That's quite a scope for a single book. Regardless, I felt I learned plenty, and I feel comforted that we are in just one of many, many historical moments when the floor fell out from the economy. Granted, it's possible we may not have a recovery in our generation (although quite possible we will too), but I'mThis book is very timely. The state of the economy has been on my mind a lot, as with many people. Ferguson paints the total historical picture of money, and its relationship with society. That's quite a scope for a single book. Regardless, I felt I learned plenty, and I feel comforted that we are in just one of many, many historical moments when the floor fell out from the economy. Granted, it's possible we may not have a recovery in our generation (although quite possible we will too), but I'm glad that there's hope for the future. As with many people, when something's going wrong, I want to have some context, some way to understand it. The economy has become the boogie man in many people's eyes, something that is scary. But if you understand the nature of the boogie man, his history, the historical casualty count with the boogie man, etc., it makes you feel better, because it's not just a mystery which could have the seeming potential for infinite harm. This book provides good historical context to the current day recession, when all that one generally hears in the news today is "noise" from "talking heads". It's good to hear one, thoughtful, well-informed indivdual put together a history which brings us all the way to our present day situation and troubles....more

Niall Ferguson (born April 18, 1964, in Glasgow) is a British (Scottish) historian who specialises in financial and economic history as well as the history of empire. He is the Laurence A. Tisch Professor of History at Harvard University and the William Ziegler Professor of Business Administration at Harvard Business School. He was educated at the private Glasgow Academy in Scotland, and at MagdalNiall Ferguson (born April 18, 1964, in Glasgow) is a British (Scottish) historian who specialises in financial and economic history as well as the history of empire. He is the Laurence A. Tisch Professor of History at Harvard University and the William Ziegler Professor of Business Administration at Harvard Business School. He was educated at the private Glasgow Academy in Scotland, and at Magdalen College, Oxford.

He is best known outside academia for his revisionist views rehabilitating imperialism and colonialism; within academia, his championing of counterfactual history is a subject of some considerable controversy. In 2008, Allen Lane published his most recent book, The Ascent of Money: A Financial History of the World which he also presented as a Channel 4 television series....more